The rich strike back

The effectiveness of the populist approach is coming into question. | Getty

The Republican was referring to the recent tax reform proposal from House Ways and Means Chairman Dave Camp that included a fresh levy on the nation’s largest banks. A group of 50 Republican House members wrote a letter in opposition to the proposal, which is now widely viewed as going nowhere. The idea that the GOP could use policies like this as a way to tap into bipartisan anger at the nation’s largest financial institutions seems to be fading, at least at the moment.

Republican elites on Wall Street and elsewhere in corporate America are now actually cheering inaction in Congress as preferable to ideas such as Camp’s.

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“The Camp draft catalyzed most of the business community around the notion that it was so bad, and it’s not just private equity and financial services — there were so many other punitive measures in there — that people just decided, the whole system’s broken here, nothing’s going to get done,” another senior Republican business leader said. “And that’s what we need to work toward. We need to work toward gridlock.”

Meanwhile in New York, fears that de Blasio would enact policies that would quickly drive businesses and wealthy residents out of the city — eroding the tax base and costing jobs — have so far failed to materialize. Gov. Cuomo swiftly made clear that the universal free pre-kindergarten education proposed by de Blasio would indeed become a reality. But it would be paid for by the state and not by any new tax on New York’s richest, as de Blasio promised. Cuomo also has set himself up on the side of charter schools — which run on a mix of public and private funding — and in opposition to de Blasio, who said he would slow the growth of charter schools and oppose their use of space in traditional public school buildings.

Langone, for his part, is now head of a group called Republicans for Cuomo. The growing consensus in New York is that while de Blasio ran a great campaign, Cuomo is now schooling him politically.

“Becoming the champion of the anti-tax movement and paying much more attention to business, it’s created a lot of good feeling around the governor,” said Kathy Wylde, president and CEO of the Partnership for New York City, a pro-business group. “He’s basically taken a position that New York is not going to remain a high-tax state.”

To be sure, there is still concern around New York that policies could eventually shift in dramatic ways from those employed under the 12-year reign of Michael Bloomberg, a Wall Street favorite. One Democratic donor said de Blasio was getting more visible backing from the party’s upper echelons, adding gravitas to his message. “People are surprised at how embracing the Clintons and Obama are of de Blasio, and it gives him an imprimatur that surprises people.” Another donor, citing problems with snow removal and the mayor’s SUV getting caught running red lights, said the fear had moved from de Blasio’s policies to his general competence. “Smart people knew that a lot of what he said was going to do was never going to happen,” this donor said. “But some of what is going on now just seems amateurish.”

Other top business executives warned that de Blasio, who was excoriated by a New York Times editorial Monday, has only just taken office. Phil Walzak, de Blasio’s press secretary, defended the mayor’s plans. “With 46 percent of our city’s population at or near the poverty line, we need bold reforms to lift up more people. And it’s not just progressives who agree — many business leaders share his vision, including his plan to provide universal pre-K with a tax on the wealthiest,” he said.

On the national level, the shift away from a focus on income inequality and reining in Wall Street stems both from the economy, which is slowly improving, and the dominant issue of the day, which is now the crisis in Ukraine.

The aggressive actions of Russian President Vladimir Putin have eased the anxieties of Wall Streeters sick of being portrayed as the enemy. “We obviously see other things driving the news cycle,” a top industry executive said. “Ukraine keeps the focus off the evil 1 percent, so I guess we have Putin to thank for that. The improving economy helps as well.”

The economy is hardly booming — but wages grew faster than expected in February, and job creation seems likely to move back to a pace of closer to 200,000 per month, enough to steadily reduce the unemployment rate.

Wall Street Democrats are praying the improving economy boosts the party’s fortunes this fall. But they are also wishing for a message on growth that resonates more deeply with voters and overcomes vulnerabilities associated with the health care law.

“Certainly income inequality will continue to be a major topic and focus on the campaign,” said Robert Wolf, a veteran investment banker, Democratic fundraiser and close friend of Obama’s. “But other issues will be important as well, including immigration reform, education reform, infrastructure and corporate and individual tax reform. These all have to be big issues for us again.”